Earnings Call Transcript - RBOT Q3 2025

Operator, Operator

Good afternoon. Thank you for joining Vicarious Surgical's third quarter earnings call for 2025. My name is Cameron, and I will be your moderator today. I will now hand over the conference to your host, Marissa Bych from the Gilmartin Group. You may continue.

Marissa Bych, Host

Great. Good afternoon. Today after market close, Vicarious Surgical released financial results for the 3 months ended September 30, 2025. A copy of the press release is available on the company website. Before we begin, I'd like to remind you that management will make statements during this call that include forward-looking statements within the meaning of federal securities laws, which are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Any statements contained in this call that relate to expectations or predictions of future events, results or performance are forward-looking statements. All forward-looking statements, including, without limitation, those relating to obtaining approval for the Vicarious Surgical System and timing for any such approval, the timing of future clinical trials and FDA submissions, cash burn expectations, our operating trends and future financial performance, expense management, market opportunity and commercialization are based upon our current estimates and various assumptions. These statements involve material risks and uncertainties that could cause actual results or events to materially differ from those anticipated or implied by these forward-looking statements. Accordingly, you should not place undue reliance on these statements. For a list and description of the risks and uncertainties associated with our business, please refer to the risk factors set forth in our Securities and Exchange Commission filings, including our most recent Form 10-K and Form 10-Q. This conference call contains time-sensitive information and is accurate only as of the live broadcast today, November 12, 2025. Vicarious Surgical disclaims any intention or obligation, except as required by law, to update or revise any financial projections or forward-looking statements, whether because of new information, future events or otherwise. Now I'll hand the call over to Stephen From, Chief Executive Officer, to begin prepared remarks.

Stephen From, CEO

Thank you, Marissa, and good afternoon, everyone. It's been a little over 3 months since I stepped into this role. We've moved from assessment to execution, and my focus has become clear: reach design freeze, extend our runway through meaningful burn reduction, and strengthen how we operate and communicate as a company. Our main priority remains achieving design freeze of the production-equivalent system, the version that includes all features and specifications required for commercialization. We continue to target completion by year-end 2026. This milestone is the foundation for everything that follows, from clinical entry to eventual commercialization, and it drives how we sequence resources and decision-making across the company. The second area of focus is reducing burn. We've acted quickly on feedback received through recent investor outreach in our October fundraise and launched a detailed exercise to identify the most effective ways to lower spending while maintaining our targeted design freeze timeline. That process has led us to evaluate targeted outsourcing opportunities and structural changes that can allow us to preserve engineering progress while improving capital efficiency. Since commencing this exercise, we have already restructured some of our internal teams and reduced headcount in certain functions. The framework is straightforward. We retain and invest in the areas that define and differentiate our technology—our robotic arms, camera systems, and core software—while evaluating outsourcing for elements that are less unique to us, such as portions of the capital equipment. This approach allows us to protect our core innovation while improving capital efficiency. To support this effort, we've engaged a well-known consulting firm to perform a gap analysis and prepare recommendations and requests for proposals for outsourcing partners. That work is underway and expected to be completed by the end of November. The goal is to enter 2026 with a disciplined plan that meaningfully reduces burn while maintaining momentum toward design freeze. In October, we strengthened our balance sheet with approximately $5.9 million in gross proceeds from a registered direct offering. Those funds support the cost actions I just outlined and the work required to keep development on track. We're also taking steps to improve our communication and transparency. Going forward, we will be sharing updates about the development of our platform, including our progress and the challenges that come with building a surgical robot in the form of short posts and videos on our LinkedIn page and our Investor Relations website. We will also introduce educational features on why certain steps, like control builds and our quality management system, matter. The goal is to give investors and partners a clear view of how innovation happens here—not just what we build, but how we build it. That's the posture we're carrying forward: disciplined on spend, focused on design freeze, and straightforward in how we communicate progress. With that, I'll turn it over to our CFO, Sarah Romano, to walk you through the financials.

Sarah Romano, CFO

Thank you, Stephen. Total operating expenses for the third quarter 2025 were $11.5 million, which is a 35% decrease compared to $17.8 million in the third quarter of 2024. Research and development expenses for the third quarter 2025 were $8 million compared to $10.8 million in the third quarter of 2024. General and administrative expenses for the third quarter '25 were $3.2 million compared to $5.7 million in the third quarter 2024. And finally, third quarter 2025 sales and marketing expenses were $350,000 compared to $1.2 million in the third quarter of '24. Our GAAP net loss for the third quarter of 2025 was $11.1 million, or $1.86 per share. This compares to GAAP net loss of $17.1 million, or $2.90 per share in the third quarter of '24. Non-GAAP adjusted net loss for the third quarter of 2025 was $11.3 million, or an adjusted net loss of $1.91 per share compared to $17 million, or $2.87 per share in the third quarter of '24. For a reconciliation of all non-GAAP measures to GAAP, please review our earnings press release. We ended the third quarter 2025 with approximately $13.4 million of cash, cash equivalents, and short-term investments on our balance sheet. This represents a third quarter cash burn rate of approximately $10.5 million. Following the close of the third quarter 2025, we successfully completed a registered direct offering, adding approximately $5.2 million in net proceeds to our balance sheet. We continue to expect full year 2025 cash burn to be approximately $50 million, and we are actively focused on reducing our cash burn for 2026. We are confident in driving a material reduction in cash burn going forward, and we are actively exploring further opportunities to bolster our balance sheet. We look forward to continuing to drive progress on our financial and technical goals in the coming quarters. With that, I will turn the call back to Stephen for closing remarks.

Stephen From, CEO

Thank you, Sarah. In closing, I remain dedicated to our commitment of transforming surgical care. As previously mentioned, tomorrow, we will formally kick off our new communication effort with frequent informative updates regarding our progress toward design freeze. These will be available on our LinkedIn page. Transparency is central to how we intend to operate, documenting progress, acknowledging hurdles, and maintaining an honest dialogue about the process. These past few months since I began at Vicarious Surgical have been vital to the company's future, and I plan on continuing my hard work in restructuring the business and regaining focus on our key milestones. I'd like to express my gratitude to our dedicated team, supportive investors, and valuable partners. Thank you all for your continued support and interest in Vicarious Surgical. Operator, we are now ready to take questions.

Operator, Operator

The first question comes from Josh Jennings with TD Cowen.

Joshua Jennings, Analyst

I apologize, my audio went in and out, but I just wanted to confirm or correct that the timeline for system build to the standard for regulatory testing and clinical use is still mid-'26 and just the progress that's been made in terms of the first control build and then the faster build over the summer. That all that progress is still in play as you're looking to outsource some of the components. Maybe just help us understand in a little bit more detail that timeline and then how it is or is not impacted by this outsourcing initiative?

Stephen From, CEO

Yes. So it's a really good question. And definitely, we're still doing everything we can to meet the timeline. And we're looking for design freeze to occur towards the end of 2026. And although there may be some disruption as we do the outsourcing, ultimately, we're hoping that it doesn't affect the timeline too much. But part of the communication plan is also to inform people, look, there's going to be some disruption. And that's — there's just no way we can get around that. But what I'd like to be able to do is when we see that there's disruption, we can communicate it in a timely manner so that you don't get blindsided. You don't have to wait every 3 months for a quarterly earnings call to be told something is going on. We're trying to manage it in a really efficient manner so that we can mitigate any issues that may crop up with the outsourcing. But it's still early days with the outsourcing. As I mentioned, we engaged a consulting firm. It's actually PA Consulting. We engaged their local office here in Boston to help us work through this plan. And we're working through that diligently. And that plan should be done by the end of this month.

Joshua Jennings, Analyst

I have a follow-up question regarding the latest version, branded PDV. Should we assume that the current design and technology will remain largely unchanged and that this outsourcing initiative is not merely a restart? I want to ensure I understand how the work completed so far will impact the final product, particularly in terms of improving manufacturability and reducing costs related to this outsourcing initiative.

Stephen From, CEO

Yes. So definitely trying to reduce the burn is important to us, but we also want to maintain that timeline as much as we can. But yes, it's not like we stopped everything and we're restarting builds. We're always improving upon a build that we've done. So when we did our first couple of builds using the control system or under control using the quality management system, we referred to those as PDV1 or pre-DV1 system. And we're using those systems, and we're always upgrading them. Well, at a certain point, though, you've done so many upgrades to that build that you want to do a new build under control, and we'll refer to that as pre-DV2. But the pre-DV2, the idea is to complete that so that we have all the features that we want to be on that system as we approach for commercialization. So our final product before we go into regulatory V&V and into the clinic, that will be the product that we want to commercialize. And that's what we're working towards right now. It's implementing all of the features that we want to have for commercialization, and they're working at the specifications that we want them to be working at. And that's where the biggest issue comes in is when you're finally doing a build using your quality management system or under control, you don't always have that luxury to push the boundaries as much as you'd like to, which you can do in an engineering build. And so you're restricted or handcuffed to using the qualifications or requirements that exist under your quality management system. And so you don't always reach the specifications that you are able to reach in your engineering build, and that's what we're working upon right now is trying to get the full build done with all the features and at the specifications that we would like to be at where we would have a system that we would take into the clinic and then into commercialization.

Operator, Operator

The next question comes from the line of Ben Haynor with Lake Street Capital Markets.

Benjamin Haynor, Analyst

Just wondering if you can provide any additional color on some of these development builds. Have you done sort of any cadaver labs, any sort of internal testing where you've had — surgeons have hands on with the kind of intermediate builds? How have those gone? Any color there would be much appreciated.

Stephen From, CEO

Yes. Another good question, Ben. Thanks for that. So as you know, or maybe not everybody knows this, we have our own OR here in our building. So we have our own suite here. And we use that. We utilize that to have surgeons come in and play around with our system and see where we're at. And we do have — one of the founders is also a surgeon, and he comes in and works with it frequently. And there's also other surgeons that come. And we just had a surgeon come up that's naive to the system and use it for the first time because we're always testing. So although we're not at full feature at the specifications we want them to be, wherever we are with the build, we need to actually test it. We need to have a surgeon come in and test it to see if it's functioning properly, see if it's stable, see if it's reliable. All of those things, we want to see how we're progressing. And as we're doing those tests, we're also able to see what's going wrong. And so yes, we're always bringing in surgeons. We've been actually very heavy on that over the last month. We've been doing different OR labs almost weekly now for the last month. A lot of the times, those are with synthetic cadavers, but a couple of weeks ago, we did do it with a cadaver, and it went really well. And what we've been able to demonstrate, and you're going to see this as we roll out the communication plan, is that we're actually seeing an increase in the stability of the system with the surgeons using it. We've been able to see a dramatic increase in time in doing the suturing for what would be known as an IPOM ventral hernia. And so when they're doing that suturing procedure, we've seen a dramatic drop in the time it takes to do that. And so that gets us really excited when we see that type of thing. And those are the type of things that—although it's not the final system with all the features that the requirements needed, it is obviously a system that's working, and we're testing it. We're always testing it. We're always doing verification, and we're always doing usability tests. And that really helps us understand where we are with our build.

Benjamin Haynor, Analyst

Got it. That's helpful. And then I appreciate the anecdotal commentary on what you've seen in the suturing. And you've got that great example, I think, in the slide deck on the regression that you had in the camera and the ability to fix it. Are there any others like that, that you'd like to share maybe as previous to the timely communication plan?

Stephen From, CEO

Well, yes, it's kind of along the same line that I was just speaking about because when you do the suturing of the mesh with an IPOM ventral hernia, the suture of the hernia itself, and then you put a mesh around it and you suture that up. And what we've seen, I mentioned the dramatic drop in timing in order to complete that. It's gone from, call it, an average of 40 minutes down to an average of 14 minutes. It's really dropped dramatically, which shows a huge improvement in the stability and reliability of the system, okay? And that's a huge drop in time, which is really impressive and exciting for the team.

Operator, Operator

We also have 2 questions submitted by Ryan Zimmerman at BTIG. The first one is, how long do you anticipate the consulting engagement to take? And what is the cost? And second, what are you doing to solve the key issue of preserving cash while reaching design freeze at year-end 2026?

Stephen From, CEO

Yes. Thanks for those questions, Ryan. So PA Consulting was engaged a few weeks ago, and it's a short engagement. It's to go through this analysis with us for what makes the most sense to be outsourcing and how to approach the outsourcing. Although we already had a plan in place, we wanted to make sure we pressure test it with an outside consulting firm that does this for a living. So we anticipate that being completed by the end of this month. They're also going to be assisting us with putting the request for proposals in place. They know our system really well. We've used them in the past to help us with our capital equipment. So it was easy for us to bring them on board because they know the teams, they know the people, they know the system really well. So they were able to complete this exercise pretty quickly for us. And they did it at a really good cost. I'm not going to tell you exactly how much it was. It was a fixed fee, but it was really, really—they did a good job for us on pricing as well. So that should be done by the end of the month. RFPs won't be done by the end of the month, but those will be done as part of this process as well. And we'll reach out to different firms with the request for proposals to get quotes and decide who we want to go forward with. The idea is to have a lot of this in place by the end of Q1. So hopefully, that will help us really dramatically lower, at least materially lower the budget for 2026 and definitely for 2027. Where that's going to end up, I don't know yet because we're still in early stages in the outsourcing. As part of that, though, and trying to control the burn, we did do a small layoff a couple of weeks ago. It's about 15% of the employees, and that's helping us also control the burn. And we went through a very long exercise to understand how to approach that and who it was that we'd be laying off. It's never easy to do one of those, but it's something we felt we needed to do post that fundraise that we did a month ago.

Operator, Operator

Ryan's follow-up is where do you stand with your hospital and health system partners through all of this?

Stephen From, CEO

Great. I mean we still reach out and they reach out to us. We have ongoing communications with them. So the relationships are really strong. They want the same thing everybody else does. They want to be able to have the system in their hospital. But we engage with the surgeons at these hospitals, and they definitely want to come over here and play with it, so we let them. And so that's—it works for us as well because we get the feedback from them, and they get really excited. Like I said, we had a surgeon that's never seen—other than seeing it on our website—never seen the system in person. And so he came here for the first time. We put him through simulation. The same day he was here, never seen the system before; he was able to perform an IPOM surgery for the first time, and he was very excited. So we have a really strong relationship with the healthcare and hospital systems, I should say.

Operator, Operator

That will conclude the call. I would now like to pass the conference back to Stephen for closing remarks.

Stephen From, CEO

Well, I'd just like to thank everybody for participating and great questions. And hopefully, everybody, we launched the communication plan at 12 noon tomorrow on our LinkedIn site. So if you would just refer to our LinkedIn as we go forward, you don't have to wait for another 3 months to hear from us. So thank you, everyone.

Operator, Operator

That concludes today's call. Thank you for your participation, and enjoy the rest of your day.